Citigroup to eliminate 50,000 jobs

Published
7:00 pm EST, Tuesday, November 18, 2008

By GREG MORCROFT

McClatchy Tribune

NEW YORK -- In the most dramatic round of layoffs seen to date in the battered U.S. financial sector, Citigroup Inc. said Monday that it plans to cut about 50,000 additional jobs as part of an effort to help stem huge losses sparked by bad investments and lending decisions.

The job cuts amount to the second-largest layoff announcement, according to Challenger Gray & Christmas, since the tracking firm began keeping score in 1993. Only a 60,000 job-cut announcement from International Business Machines Corp. in 1993 was bigger than Citi's disclosure on Monday.

Citi management also plans to reduce company costs in the near term by 20 percent and will continue to sell off troubled assets.

Shares of Citigroup, part of the Dow Jones Industrial Average, traded off more than 6 percent at $8.89.

Combined with earlier cuts of more than 20,000 positions, the latest job cuts will equal a 20 percent reduction in the financial giant's workforce from peak levels reached in the fourth quarter of 2007.

The layoffs are the latest in a brutal round of employment cutbacks across the financial industry. The reductions have been sparked by unprecedented losses due to bad credit investments, as well as the subsequent precipitous drop in banking and financial services amid the worst economic conditions in 70 years.

In one fell swoop, Citigroup, which has bank locations in Stamford, is eliminating more jobs than the entire sector has cut over the four preceding months combined.

That's raising questions on Wall Street about how Chief Executive Vikram Pandit is handling running the major bank, as he was supposed to bring an outsider's perspective and some creativity to the financial-services conglomerate.

According to Challenger Gray & Christmas, which tracks employment data and announcements of corporate job cuts, financial-services firms have cut loose 129,150 workers through October 2008. Adding in Citigroup's job cuts, that total would jump to about 180,000.

In 2007, the financial-services industry cut 153,000 jobs, more than triple the volume of positions shed during 2006.

Meanwhile, London's Daily Telegraph reported over the weekend that fellow financial-services blue chip J.P. Morgan Chase & Co. is planning thousands of job cuts worldwide. The report cited people close to the matter.

In a presentation for delivery to a "town hall meeting" of all Citigroup employees, the bank -- once the largest in the United States -- said at the end of the September it employed 352,000 people, with its near-term head count target pegged at about 300,000.

Citigroup has lost more than $20 billion in the last year, and it has eliminated more than 20,000 jobs in that same period.

In October, Dow component American Express Co. announced major layoffs, unveiling plans to slash 7,000 jobs.

Also in October, major sector layoff announcements came from National City Corp., which cut 4,000 even as it's in the process of being acquired by PNC Financial Services Group, as well as Barclays PLC, which laid off 3,000. Most recently, mutual-fund giant Fidelity Investments said it has plans to cut about 3,000 jobs.

For its part, Citigroup hasn't ruled out forgoing bonuses for its top management as well, Chairman Win Bischoff told the Associated Press in Dubai.

New York Attorney General Andrew Cuomo waded into the matter Monday, urging Citigroup's top executives to forgo their bonuses this year, saying the plan to slash 50,000 jobs is a "sad and disturbing" development.

In a statement Monday, Cuomo said Citi's stated intention to wait until next year to make a decision on bonuses is "a mistake."

"After four consecutive quarterly losses, it seems only fair that top executives should shoulder their fair share of these difficult economic times," according to Cuomo. "It would send exactly the wrong message for Citigroup's top brass to collect bonuses while investors, taxpayers and now Citigroup's own employees suffer."

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